Correlation Between Galenfeha and Aecom Technology

Can any of the company-specific risk be diversified away by investing in both Galenfeha and Aecom Technology at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Galenfeha and Aecom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Galenfeha and Aecom Technology, you can compare the effects of market volatilities on Galenfeha and Aecom Technology and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Galenfeha with a short position of Aecom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galenfeha and Aecom Technology.

Diversification Opportunities for Galenfeha and Aecom Technology

-0.43

Correlation Coefficient

Galenfeha  Aecom Technology

Very good diversification

The 3 months correlation between Galenfeha and Aecom is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Galenfeha and Aecom Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecom Technology and Galenfeha is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Galenfeha are associated (or correlated) with Aecom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecom Technology has no effect on the direction of Galenfeha i.e., Galenfeha and Aecom Technology go up and down completely randomly.

Pair Corralation between Galenfeha and Aecom Technology

Given the investment horizon of 90 days Galenfeha is expected to generate 12.15 times more return on investment than Aecom Technology. However, Galenfeha is 12.15 times more volatile than Aecom Technology. It trades about 0.06 of its potential returns per unit of risk. Aecom Technology is currently generating about 0.06 per unit of risk. If you would invest  6.50  in Galenfeha on February 4, 2024 and sell it today you would lose (3.95) from holding Galenfeha or give up 60.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.17%
Values	Daily Returns

Galenfeha  vs.  Aecom Technology

Galenfeha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galenfeha has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Aecom Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aecom Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Aecom Technology may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Galenfeha and Aecom Technology

The main advantage of trading using opposite Galenfeha and Aecom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galenfeha position performs unexpectedly, Aecom Technology can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Aecom Technology will offset losses from the drop in Aecom Technology's long position.

The idea behind Galenfeha and Aecom Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.